America's Home :: Free Monthly Ezine from 2Work-At-Home.Com

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January 1, 2002

In this issue:

1. A Note From Sharon
2. In The Spotlight...
    Tax tips for the self-employed
    by Annelena Lobb
3. What's New At 2Work-At-Home.com?
4. This Month's Freebie
5. Featured Article:
    The Fear Factor
    by Sharon Davis
6. Featured Article:
    The First Steps On The Road To Financial Success...
    And Perhaps Even Wealth
    by Craig Lock
7. Great Homebased Business Idea
8. Like This Ezine?
9. How To Advertise With Us

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A Note From Sharon

Happy New Year and a warm welcome to all of our new and continuing subscribers.

I’m ready for a new start this year, and in the spirit of change you’ll find some new formatting in this issue as well as some terrific articles.New to our ezine will be This Month’s Freebie, where we will feature a free resource offered exclusively to our readers.

In our Spotlight Feature, Annelena Lobb shares tax tips such as hiring your kids and expensing new equipment to keep the IRS at bay.

If you’ve been wanting to start a business, but fear has held you back you’ll relate to "The Fear Factor". It’s the story of my brother-in-law’s never-ending quest to start a business.

Lastly, I’d like to wish you and your families a safe, happy and prosperous New Year. I hope you will achieve a goal or two this year, whatever they may be.

Sharon Davis
Editor, 2Work-At-Home.com
Sharon@2work-at-home.com

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Tax tips for the self-employed
By Annelena Lobb

Hire your kids and expense new equipment to keep the IRS at bay.

NEW YORK (CNN/Money) - If you're a small business owner, chances are you enjoy the perks that come with the job: setting your own hours; being your own boss.

But you may also feel you get the short end of the stick every April 15th. That's because the self-employed get stuck paying both the employer and employee share of Social Security. Depending on your income, you may also pay more in Medicare.

The good news is there are a number of ways to offset those expenses using tax deductions and write-offs. You just have to know where to look.

The following list includes a snapshot of the simplest ways to cut your tax bill down to size. Just remember, to claim them on your 2001 return, you'll need to take advantage of them by Dec. 31.

1.) Employ your dependent children.

Tax professionals say you can reduce your taxable income by employing your children who are under 18. Rather than giving your kids a weekly allowance for household chores, put them to work for you and deduct the dollars you pay them from your taxable income. Kids under 18, who can file papers, update computer records, and send out invoices, are allowed to earn up to $4,550 a year in income before they have to file an income tax return.

"If you pay him even $20 a week, you'll shift $1,040 over the course of a year in income from your salary over to your child," said Frank Degen, an enrolled agent in Setauket, N.Y.

Note: This strategy works only if you have an unincorporated business. If you have a corporation, you'll have to pay Social Security taxes on the wages you pay your child. And, of course, it has to be bona fide work - you can't put a four-year-old on the books.

2.) Hire your spouse and pay for health care.

If you hire your spouse and provide him or her 100 percent health benefits, you can deduct the entire cost of paying those benefits on Schedule C.

"[Your spouse] can then name you for the spousal benefit, and bingo - you've both got health care," said enrolled agent David Bergmann, of the David R. Bergmann Group for Tax, Insurance and Financial Services in Marina Del Rey, Calif.

One medical plan option for the self-employed includes medical savings accounts, or MSAs. These tax-friendly accounts, when used together with a high-deductible insurance policy, allow you to use pre-tax dollars to fund the account and the money is used to pick up the tab on prescriptions and procedures your primary insurance company doesn't cover. MSAs are open to small businesses with 50 or fewer employees and any unused money at the end of the year stays in the account accruing interest.

3.) Make your home your office.

If you run your office exclusively and regularly from your home - that is, you perform all the administrative tasks for your business there - then you may be able to claim a home office deduction.

"Previously, someone like a plumber, who may have run his office from home and had a secretary there, could not take this deduction because he provided goods and services outside the home," said Degen. "Of course, the IRS realized the inequity there and changed the rules."

Now, this hypothetical plumber could deduct his home office costs, provided he had no offices elsewhere and he used the home office on a regular basis.

4.) Expense new equipment under IRS Section 179.

Whether they work with computers or lawnmowers, small business owners normally write off the cost of equipment as it depreciates over the years. But IRS Section 179 allows you to write off up to $24,000 in equipment costs at once, provided you elect it the first year you put the asset in service.

You must have made enough to qualify for this deduction; you can't elect Section 179 if the deduction creates a net operating loss. There's one other limitation - if you buy more than $200,000 worth of equipment, it reduces your 179 election dollar-for-dollar.

Got it? Here's an example. "Luke and Jane are married taxpayers, and each owns a separate business," said Connie Kurtz, an enrolled agent at Taxmasters, Inc., a tax and accounting services firm in Rockville, Md. "He buys $75,000 in assets; she buys $130,000. In total, they bought and placed $205,000 of assets into service. Since the maximum limit is $200,000, they reduce their 179 by $5,000. So the couple can't take the entire 179 exclusion of $24,000, but the reduced amount of $19,000."

But hey, if you do qualify, go ahead and write off that new dentist's chair. The cap is set to rise to $25,000 after 2002.

5.) Keep track of where you drive.

Make sure you properly account for the mileage on your automobiles, Degen said. If you use your car for business purposes, you're entitled to take 34.5 cents per mile of business travel.

Most people don't bother to keep adequate travel logs and receipts. But keeping track is worth it - the amount can add up.

6.) Open a retirement plan.

Putting funds away in a retirement plan like a Simple IRA, a Keogh plan or a SEP plan reduces your taxable income. There are deadlines throughout the year to establish certain types of retirement plans, so make sure you keep track of the calendar.

A Keogh plan allows you to put away up to 25 percent of your gross income, a SEP plan permits 15 percent, and a Simple IRA allows up to $6,000.

You can open multiple plans, but there are some limitations. There is a cap on the amount that you can end up putting into pension plans - you can't put away more than $35,000 in a SEP or Keogh or more than $6,000 in a Simple IRA, said Bergmann.

7.) Deduct part of your medical and long-term care premiums.

Self-employed folks can deduct 60 percent of long-term care premiums and/or 60 percent of their medical premiums from gross income, said Kurtz. Just keep in mind that in order to take the deduction, you need to have income on Schedule C.

"Both limits are set to rise to 100 percent in 2003," Bergmann added. "The provision was put into place for small business owners who could not otherwise itemize their taxes and would have lost any possible deduction for medical expenses."

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What's New?

This Month's Freebie

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Feature Article

The Fear Factor
© Copyright 2001 Sharon Davis

My brother-in-law is in the process of starting a home business. In fact, he's been in the process of starting it for over 2 years now.

It seems that Bill (that's not really his name, but I don't want to embarrass him), is afraid to take the big step.

He wasn't afraid to take the first step. He's taken lots of steps. He's going to be selling a product, so he's done some really important (and expensive) groundwork like designing his product, testing it, getting a patent, getting a business license, setting up his accounting procedures and even designing his website.

Bill spent alot of time on his website (he's a bit of a perfectionist). I've offered to get him up and running on the web, submit it to the search engines, and basically handle the website administration for him.

About 2 months ago, his site was all set and I've been waiting for his go ahead to "go live" ever since. Whenever I ask him if he's ready, he has a vague reason for not going ahead: "I need to make more of model x" or "I've decided to redesign a few things on the website".

It has become clear to me that Bill is afraid of failure (or even his own success).

This is an all to common situation among would-be business owners. Let's face it-- it's a pretty scary thing to be completely responsible for your own livelihood. In fact, this fear is often the one thing that keeps a person from realizing their dream of having a home business.

There are some good reasons to be nervous, too. The Small Business Administration estimates that 33% of small businesses fail within the first year, 50% fail within the second year and 60% to 70% will fail within their first five years of operation.

People have all kinds of reasons that keep them from starting a business:

They're afraid they'll lose money
They're afraid of what their family and friends will think of them if they fail.
They're fearful of the enormous responsibility that comes with owning a business.
They think it's too hard, or that they don't have enough time.

But should we really let fear come between us and our dreams? In this past year, we've learned that we have tremendous strength within each of us-- whether we knew it or not. And lots of people *are* successful. Why shouldn't Bill be one of the ones who succeeds? I believe that he has it in him to be successful, but he just has to get past the fear factor and take that next step.

And if you're planning to start a home business then do your homework, find something that you feel passionate about, plan your business, but don't let fear keep you from achieving your goals.

--------------------------------
Sharon Davis is the owner of 2Work-At-Home.Com and the Editor of the site's monthly ezine, America's Home. In her spare time she reminisces about what it was like to have spare time. To subscribe to her free ezine, Click Here

This article may be reproduced providing it is published in it's entirety, including the author's bio. For a text version via autoresponder, send a blank email to fearfactor@sendfree.com

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Feature Article

THE FIRST STEPS ON THE ROAD TO FINANCIAL SUCCESS... AND PERHAPS EVEN WEALTH
by Craig Lock

"Wealth is better than poverty... if only for financial reasons."
- Woody Allen

Well now is a great time of the year to reflect on past happenings and plan ahead for 2002. Some points to "kick off"...

* Without financial independence, you are a slave to money.

* Achieving financial independence will take time, dedication and lots of hard work... but will be worth it in the end.

* Remember, money isn't everything. It has been said that 'money is the root of all evil", but only an obsession and love of money for it's own sake, I believe, is bad. Substantial amounts of money can be used for charitable purposes, if that is your wish .... but "charity begins at home".

* Nearly everyone has the ability to be successful, but very few have the desire as well as the commitment to make the sacrifices necessary to achieve wealth.

1. Accept that you can achieve financial success and make a commitment to yourself to attain it. It is within your grasp if you really want it. Really BELIEVE it - that is the most important step. Only then will the incredible power of the human mind work out a means of achieving it. Reject the idea that work is simply something you have to do until the age of retirement.

2. Ask yourself this: Where do you want to be in 2,5,10 years time? Set goals that excite you. If you could do absolutely anything with your life, what would you do. If you had unlimited money or found out you only had a month to live, what would you do? Write them down.

3. Establish your current financial position. What is the cash inflow and outflow. Horrors! Which areas can be improved upon? Everything!

4. Develop your NEW plans. Decide what action you are going to take that will move you closer to the achievement of your goals? All goals should be specific and have a time constraint.

5. Closely monitor the performance of your investments and your rate of savings.

6. Try to put extra savings into investment (it could be your own business)

7. Review and reward yourself annually if your targets are met.

8. Pursue your personal goals and business ideas with all you've got. With real PASSION and PURPOSE. If you really BELIEVE In them, they are far more likely to be achieved.

9. Still try to live a BALANCED life... or as balanced as you can make it. Money doesn't buy happiness; yet I'd rather be unhappy in comfort!

10. The highest cost of all is the cost of waiting to TAKE ACTION to change your current circumstances in life (as 94% of the population apparently are dissatisfied with their situations. It is up to you to do things differently. So take ACTION now- to change course. You get only one shot at life, so make the most of it.

N.B: 99% of the population do not achieve financial success, because they lack the real COMMITMENT to achieve financial independence. I believe they are too busy earning a living to survive to really THINK about how to make big money. Really use the unlimited power of your CREATIVE IMAGINATION. However, it takes a great commitment in TIME, MONEY and ENERGY and patience to achieve ultimate financial independence. So make that effort and INVEST IN YOURSELF, first.
To recap (in a line)...

THE THREE LEGS TO GROWING RICH

Like the three legs of a stool. All are equally important in ensuring financial independence.

The key:

MAKING MONEY + SAVING IT + INVESTING WISELY = FINANCIAL SUCCESS

Have a PLAN, then put it into ACTION.

"People don't plan to fail, but fail to plan."

Always remember,

* True prosperity is created from within. All prosperity is created in the mind. You are only as wealthy, happy or as prosperous as WHAT YOU FEEL... and what you make up your mind to be. And money is not everything. For me, health, family and happiness are far far more important considerations.

Aim high, dream high.

If you aim for the tree tops, you might not get off the ground... so why not aim for the stars.

Good luck and Happy Christmas holidays

Craig Lock

Believe in yourself and in your dream,
Though impossible things may seem
Someday, somehow you'll get through
To the goal you have in view.
Mountains fall and seas divide,
Before the one who in his stride
Takes a hard road by day
Sweeping obstacles away
Believe in yourself and in your plan
Say not - I cannot - I can
The prizes of life we fail to win
Because we doubt the power within.
- anon

-------
About the Author:

Craig Lock has been involved in the personal finance field for over twenty-five years in various countries. He is now an author of five published books with another twelve being published and marketed on the Internet. Craig has studied and written extensively on money matters: articles, brochures for financial institutions and books.

For valuable money information to help you make and save your hard-earned money

Get out of debt **

-Learn how to invest
-Retire early
-Take control of your finances

See:
The Million Dollar Money Tree

Money Management Course (online):
http://www.nzenterprise.com/writer/online.html

The various books* that I "felt inspired to write" are available at:
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http://www.novelty-gift.com/ebooks.html

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A Great Homebased Business Idea

Pet therapy. The phrase sparks an image of a dog lying on a couch, paws in the air, barking about his owner's bad habits to a man in an oversized leather chair.

While pet therapists do deal with the behavior of dogs, they say the business focuses more on training and working with owners' frustrations than with pets' problems.
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For 100's more great ideas, visit the Ideas pages. We've added lots of new ideas!

For more Business Opportunity ideas, visit the Business Opps section.

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